Small Cap Watch List (Track at Marketocracy) member Delta Apparel (DLA) announced it will close a plant and take restructuringcharges of approximately $10.0 million, or $0.75 per diluted share over the next few quarters. Two thirds of the charge fall into the current quarter. It also took the opportunity to update its guidance:

Fourth Quarter and Fiscal 2007 Preliminary Results

The Company’s sales for its 2007 fourth fiscal quarter are approximately $92 million. This brings sales for the full 2007 fiscal year to approximately $312 million, almost a 16% increase over the prior fiscal year.

Including the $6.9 million, or $0.51 per diluted share, of start-up, excess and impairment charges associated with its textile restructuring, the Company now expects diluted earnings per share for its fourth quarter to be in the range of $0.06 to $0.08 versus its prior expectation of $0.50 to $0.55. As a result, earnings for the full 2007 fiscal year are expected to be in the range of $0.71 to $0.73 per diluted share. This compares to the Company’s previously disclosed expectations of earnings in the range of $1.15 to $1.20 per diluted share prior to the restructuring related charges.

Fiscal 2008 Guidance

For the 2008 fiscal year ending June 28, 2008, the Company expects net sales to be in the range of $335 to $350 million and diluted earnings per share to be in the range of $1.36 to $1.52. This includes the $3.2 million, or $0.23 per diluted share, of anticipated expenses associated with the start-up of the new Honduran textile facility and the shutdown of the Fayette, Alabama facility that will impact results in the first two quarters of fiscal 2008.

Analysts were expecting the company to earn $0.52 in the current quarter, or $0.01 after the charge. For next year they were expecting $1.35, or $1.11 after restructuring charges.

With the new estimates, on an adjusted basis, now significantly higher than the previous consensus it is probably no surprise that the stock is rallying. I admire the company for issuing the guidance according to GAAP and letting the analysts work out any adjustments they want to make. The true earnings power is probably somewhere between the GAAP and the pre-charge numbers anyway. But even using the GAAP numbers the stock is trading at a fairly reasonable 12x the midpoint of next year’s earnings.

With the end of the first quarter approaching, it is time to adjust the names in my Watch Lists. I will price all the new lists as of the close on Friday, June 29.

Today I present my planned updates to the Small Cap Watch List. There was a fairly high level of turnover to the list. 12 of the 24 names from the previous run made it to the current list, which was also 24 names. Performance-wise, the list created in March has returned an unweighted average return of 2.6% through June 28, with 80% of the stocks in positive territory. All of the money-losers from the previous list fell out of consideration.
So without further ado, the names on the chopping block from the previous list are: PW Eagle (PWEI), Insteel Industries (IIIN), Allied Defense (ADG - Annual Report), Hartmarx (HMX), Parlux (PARL), Hansen Natural (HANS), FirstFed Financial (FED), Young Innovations (YDNT), ITT Educational (ESI), Rent-a-Center (RCII), Valassis (VCI), and Travelzoo (TZOO). The castaways include four of the five money losers from the previous portfolio (HMX, PARL, YDNT and TZOO) as well as the biggest gainer (ESI).
The new list is:

I will continue to track both lists on StockPickr.